Exhibit 10.1


 


EXECUTION VERSION


 


SECURITIES PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of December 21, 2016, between WPCS International Incorporated, a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its
successors and permitted assigns, a “Purchaser” and collectively, the “Purchasers”).


 


PREAMBLE


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement (the “Offering”).


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


 


ARTICLE I.


DEFINITIONS


 


1.1       Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:


 


“Accredited
Investor” shall have the meaning ascribed to it in Section 3.2(c).


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.17.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Beneficial
Ownership Limitation” shall have the meaning ascribed to such term in Section 4.21.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.


 


“Buy-In”
shall have the meaning ascribed to such term in Section 4.1(g).


 


“Certificate
of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary
of State of Delaware, in the form of Exhibit B attached hereto.


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.


 




    	 	 	 



     


    

  


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount at such Closing
and (ii) the Company’s obligations to deliver the Securities to be issued and sold at such Closing, in each case, have been
satisfied or waived, but in no event later than the third Trading Day following the date hereof in the case of such Closing.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, $0.0001 par value, and any other class of securities into which such securities
may hereafter be reclassified or changed.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.


 


“Company
Counsel” means K&L Gates LLP, 599 Lexington Avenue, New York, NY 10022, Attn: Robert S. Matlin, Esq., facsimile:
(212) 536-3901.


 


“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the Shares.


 


“Disclosure
Letter” means that certain letter delivered by the Company to the Purchasers simultaneously with the execution and delivery
of this Agreement.


 


“Dispute
Submission Deadline” shall have the meaning ascribed to such term in Section 4.23(a)(ii).


 


“Effective
Date” means the date that the initial Registration Statement has been declared effective by the Commission.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock and options to officers, employees, directors or consultants
of the Company issued pursuant to plans approved by a majority of the stockholders and a majority of the independent members of
the board of directors of the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder
(subject to adjustment for forward and reverse stock splits and the like that occur after the date hereof) and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities and any term thereof have not been amended since the date of this Agreement to increase the number
of such securities or to decrease the issue price, exercise price, exchange price or conversion price of such securities and which
securities and the principal terms thereof are set forth on Section 3.1(g) of the Disclosure Letter, and described in the
SEC Reports filed not later than five (5) Business Days before the Closing Date, (c) full or partial consideration in connection
with a strategic merger (including a reverse merger), acquisition, consolidation or purchase of substantially all of the securities
or assets of a corporation or other entity which holders of such securities or debt are not at any time granted any registration
rights but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities, (d) securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not primarily for the purpose of raising capital and which holders
of such securities or debt are not at any time granted registration rights; and (e) securities as payment for investment banking
services provided to the Company.


 




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“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


“FDCA”
shall have the meaning ascribed to such term in Section 3.1(nn).


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“G&M”
means Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.


 


“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(d).


 


“Liens”
means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Listing
Default” shall have the meaning ascribed to such term in Section 4.9.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.21.


 


“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(r).


 


“OFAC”
shall have the meaning ascribed to such term in Section 3.1(kk).


 


“Offering”
shall have the meaning ascribed to such term in the Preamble.


 


“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.12(a).


 


“Permitted
Indebtedness” means (i) the accounts receivable factoring arrangement described in the SEC Reports; (ii) capital lease
obligations and purchase money indebtedness of up to $400,000, in the aggregate, incurred in connection with the acquisition of
capital assets up to the purchase price of such assets and lease obligations with respect to newly acquired or leased assets; and
(iii) any asset-backed credit line or similar facility.


 




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“Permitted
Lien” means the individual and collective reference to the following: (A) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (B) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries, or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
and (C) Liens incurred prior to or subsequent to the Closing Date in connection with Permitted Indebtedness.


 


“Per
Share Purchase Price” equals the product of (i) the closing price of the Common Stock on the principal Trading Market
for the Trading Day immediately preceding the day this Agreement is executed and delivered by the Company and Purchaser, subject
to appropriate adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement multiplied by (ii) 100.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(b).


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.12(e).


 


“Protection
Period” shall mean the period during which any Purchaser holds ten percent (10%) or more of the aggregate number of Shares
or Warrants issued to the Purchasers hereunder.


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.7.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit C attached hereto.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Conversion Shares and Warrant Shares by each Purchaser as provided for in the Registration Rights Agreement.


 




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“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Required
Dispute Documentation” shall have the meaning ascribed to such term in Section 4.23(a)(ii).


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 


“Rule
506 Bad Actor Questionnaire” means the form annexed hereto as Exhibit F.


 


“SEC
Reports” shall mean all reports, schedules, forms, statements and other documents filed by the Company under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof, including
the exhibits thereto and documents incorporated by reference therein.


 


“Securities”
means the Shares, the Conversion Shares, the Warrants and the Warrant Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Securities
Laws” means the securities laws of the United States or any state thereof and the rules and regulations promulgated thereunder.


 


“Series
H-2 Preferred Stock” means the Series H-2 Convertible Preferred Stock, par value $0.0001, of the Company, subject to
the terms contained in the Certificate of Designation.


 


“Share
Purchase Price” shall have the meaning ascribed to such term in Section 2.1.


 


“Shares”
means the shares of Series H-2 Preferred Stock issued to the Purchasers pursuant to this Agreement.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 


 


“Stock
Option Plan” means the Stock Option Plan of the Company in effect as the date of this Agreement, the principal terms
of which have been disclosed in the SEC Reports.


 


“Subscription
Amount” means, as to each Purchaser at the Closing, the aggregate amount of cash consideration to be paid for Shares
and Warrants purchased hereunder at the Closing as specified below such Purchaser’s name on the signature page of this Agreement
and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.


 


“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).


 




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“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).


 


“Subsidiary”
means any subsidiary of the Company as set forth on Section 3.1(a) of the Disclosure Letter and shall, where applicable
and with regard to future events, also include any direct or indirect subsidiary of the Company formed or acquired after the date
hereof.


 


“Termination
Date” shall have the meaning ascribed to such term in Section 2.1(a).


 


“Trading
Day” means a day on which the principal Trading Market is open for trading; provided, that in the event that the Common
Stock is not listed or quoted for trading on a Trading Market on the date in question, then Trading Day shall mean a Business Day.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board, the OTCQB or the OTCQX (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Certificate of Designation, the Warrants, all
exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.


 


“Transfer
Agent” means Interwest Transfer Company, Inc., 1981 Murray Holladay Road, Suite 100, Salt Lake City, UT 84117, facsimile:
(801) 277-3147, and any successor transfer agent of the Company.


 


“Warrant
Purchase Price” shall have the meaning ascribed to such term in Section 2.1.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in the form of Exhibit A
attached hereto.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants, provided that any share of Common Stock
issued upon exercise of the Warrants shall not constitute an issued Warrant Share for purposes of this Agreement after such share
has been irrevocably sold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 without
further restrictions or conditions to transfer pursuant to Rule 144.


 


ARTICLE II.


PURCHASE AND SALE


 


2.1           Closing. 
On one or more Closing Dates, upon the terms and subject to the conditions set forth herein, substantially concurrent with the
execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each of the Purchasers, severally
and not jointly, agrees to purchase the Shares for an aggregate purchase price up to a maximum of $400,000 (“Share
Purchase Price”), together with Warrants to purchase in the aggregate shares of Common Stock equal to one hundred and
fifty percent (150%) of all Purchasers’ Conversion Shares, at a price for each Warrant issuable on the applicable Closing
Date pursuant to this Agreement of $0.125 per Warrant Share (“Warrant Purchase Price”) (in the aggregate, the
Share Purchase Price and Warrant Purchase Price is the “Purchase Price”) (such purchase and sale being the “Closing”).
Prior to the Closing, each Purchaser shall deliver to the Company, inter alia, such Purchaser’s Subscription
Amount as set forth on the signature page hereto executed by such Purchaser by a wire transfer of immediately available funds,
and the Company shall, on the Closing Date, deliver to each Purchaser, inter alia, a certificate representing the
number of Shares and Warrants purchased by each such Purchaser at the Closing as determined pursuant to Section 2.2(a). The Company
and each Purchaser shall also deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of
the covenants and conditions set forth in Sections 2.2 and 2.3, the Closings shall occur at the offices of G&M or such other
location as the parties shall mutually agree. There may be more than one (1) Closing. Notwithstanding anything herein to the contrary,
each Closing Date shall occur on or before December 27, 2016 (such outside date, “Termination Date”). If any
Closing is not held on or before the Termination Date, (i) all subscription documents executed by the Company or a Purchaser shall
be returned to the Company or such Purchaser, as applicable, and (ii) each Subscription Amount shall be returned, without interest
or deduction to the Purchaser who delivered such Subscription Amount.


 




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NO MINIMUM NUMBER
OF SHARES AND WARRANTS MUST BE SOLD IN ORDER FOR THE COMPANY TO ACCEPT ANY SUBSCRIPTIONS AND CONDUCT A CLOSING, AND ALL NET PROCEEDS
OF THE OFFERING WILL BE IMMEDIATELY AVAILABLE FOR COMPANY PURPOSES.


 


2.2          Deliveries.


 


(a)           On
the applicable Closing Date, the Company shall deliver or cause to be delivered to the Purchasers the following:


 


(i)           this
Agreement and the Registration Rights Agreement each duly executed by the Company;


 


(ii)         Intentionally
Omitted;


 


(iii)         a
certificate evidencing a number of Shares of Series H-2 Preferred Stock equal to such Purchaser’s portion of the Share Purchase
Price divided by the Per Share Purchase Price registered in the name of such Purchaser;


 


(iv)         Warrants registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to one hundred and
fifty percent (150%) of such Purchaser’s Conversion Shares (assuming the Shares calculated pursuant to clause (iii) above
are fully converted at the Closing), with an initial exercise price equal to the Per Share Purchase Price, subject to adjustment
therein;


 


(v)         The
Company shall have delivered a certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Sections 2.3(b); and


 


(vi)         The
Company shall have delivered a certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying
the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and
the other Transaction Documents and the issuance of the Securities, certifying the current versions of the Articles of Incorporation
and Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related
documents on behalf of the Company.


 




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(b)          On
or prior to the applicable Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:


 


(i)          this
Agreement and the Registration Rights Agreement each duly executed by such Purchaser; and


 


(ii)         such
Purchaser’s Subscription Amount by wire transfer to the account previously specified by the Company.


  


2.3           Closing
Conditions.


 


(a)           The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)          the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as
of a specific date therein in which case they shall be accurate as of such date);


 


(ii)         all
obligations, covenants and agreements of each Purchaser under this Agreement required to be performed at or prior to the Closing
Date shall have been performed in all material respects; and


 


(iii)      the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.


 


(b)            The
respective obligations of a Purchaser hereunder in connection with the Closing, unless waived by such Purchaser, are subject to
the following conditions being met:


 


(i)           the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);


 


(ii)          all
Required Approvals, obligations, covenants and agreements of the Company under this Agreement required to be performed at or prior
to the Closing Date shall have been performed;


 


(iii)         the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;


 


(iv)         there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and


 




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(v)        from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time from the date hereof prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market
which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities
at the Closing.


 


2.4         Purchaser’s
Right To Terminate. Anything in any of the Transaction Documents to the contrary notwithstanding, each Purchaser has the right
to demand and receive back from the Company such Purchaser’s Subscription Amount at any time until a Closing takes place
in connection with such Subscription Amount. UNDER NO CIRCUMSTANCES WILL THE PURCHASER’S SUBSCRIPTION AMOUNT BE DELIVERED
TO OR UNDER THE CONTROL OR AUTHORITY OF ANY PLACEMENT AGENT OR BROKER INCLUDING BUT NOT LIMITED TO PALLADIUM CAPITAL ADVISORS LLC.


 


ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1          Representations
and Warranties of the Company. Except as set forth in the Disclosure Letter, which Disclosure Letter shall be deemed a part
hereof, the Company hereby makes the following representations and warranties to each Purchaser as of the Closing Date:


 


(a)           Subsidiaries. 
All of the direct and indirect subsidiaries of the Company are set forth on Section 3.1(a) of the Disclosure Letter. The
Company owns, directly or indirectly, a majority of the capital stock or other equity interests of each Subsidiary free and clear
of any Liens, other than Permitted Liens, subject to restrictions under applicable laws, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.


 


(b)           Organization
and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing,
as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 




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(c)           Authorization;
Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder.  The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other laws of general application affecting enforcement of creditors’ rights
generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies.


 


(d)           No
Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) by the Company or any Subsidiary under, result in
the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including Securities
Laws), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(e)           Filings,
Consents and Approvals.  Except as disclosed on Section 3.1(e) of the Disclosure Letter, the Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court
or other provincial or foreign or domestic federal, state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required
pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission pursuant to the Registration Rights Agreement, (iii)
the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, all of which shall have been effectuated
prior to the Closing, and (iv) the filing of a Form D with the Commission (collectively, the “Required Approvals”).


 


(f)           Issuance
of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens other than restrictions
on transfer provided for in the Transaction Documents and Liens resulting from the activities of any Purchaser. The Company has
reserved from its duly authorized capital stock the maximum stated number of Shares, Conversion Shares and Warrant Shares issuable
pursuant to this Agreement and the Warrants.


 




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(g)           Capitalization. 
The capitalization of the Company is as set forth in Section 3.1(g) of the Disclosure Letter. The Company has not issued
any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Stock Option Plans, the issuance of shares of Common Stock to employees pursuant to the Stock
Option Plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as disclosed on Section
3.1(g) of the Disclosure Letter, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for,
or giving any Person any right to subscribe for or acquire any shares of Common Stock, or material contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. Except as set forth on Section 3.1(g) of the Disclosure Letter, the issuance and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and
will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under
any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully
paid and nonassessable, have been issued in material compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
Except as disclosed on Section 3.1(g) of the Disclosure Letter, there are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.


 


(h)          Form
8-K; Financial Statements. Except as disclosed on Section 3.1(h) of the Disclosure Letter, the Company has filed all
reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 12(g), 13(a) or 15(d) thereof, for the two years preceding the date hereof on a timely
basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  The Form 8-K described in Section 4.4, upon its
filing, will comply in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The latest
audited financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such
financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP and
are subject to normal, immaterial, year-end audit adjustments, and fairly present in all material respects the financial position
of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.


 




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(i)           Material
Changes; Undisclosed Events, Liabilities or Developments.  Except as disclosed on Section 3.1(i) of the Disclosure
Letter, since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed
in a subsequent SEC Report filed not later than five Trading Days prior to the date hereof: (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables, and accrued expenses incurred in the ordinary
course of business consistent with past practice, (B) transaction expenses incurred in connection with the Transaction Documents,
and (C) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or
Affiliate, except for the issuances set forth on Section 3.1(g) of the Disclosure Letter. The Company does not have pending
before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated
by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably
expected to occur or exist, with respect to the Company or its Subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that would be required to be disclosed by the Company under applicable Securities Laws at the time
this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date
that this representation is made.


 


(j)           Litigation. 
Except as set forth in the SEC Reports or disclosed on Section 3.1(j) of the Disclosure Letter, there is no action, suit,
inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting
the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) that would,
if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, nor to the knowledge
of the Company is there any reasonable basis for any such Action that would, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor, to the Company’s knowledge,
any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under
Securities Laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the Company or, to the knowledge of the Company, any current or
former director or officer of the Company, nor any current or former officer, director, control person, principal shareholder,
or creditor with respect to the relationship of any of the foregoing to the Company, nor to the knowledge of the Company is there
any reasonable basis for any of the foregoing. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 




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(k)           Labor
Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected by the Company to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, which could reasonably be expected to result in a Material Adverse Effect and the continued
employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.


 


(l)           Compliance. 
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.


 


(m)          Regulatory
Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as actually conducted
and as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material Permit.


 


(n)           Title
to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by
them and good and marketable title in all personal property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Permitted Liens. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company
and the Subsidiaries are in compliance, except where the non-compliance would not reasonably be expected to result in a Material
Adverse Effect.


 




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(o)          Intellectual
Property.


 


(i)          The
term “Intellectual Property Rights” includes:


 


		1.	the name of the Company, all fictional business names, trading names, registered and unregistered trademarks, service marks,
and applications (collectively, “Marks'');



 


		2.	all patents and patent applications (collectively, “Patents'');



 


		3.	all copyrights in both published works and unpublished works (collectively, “Copyrights”);



 


		4.	all rights in mask works (collectively, “Rights in Mask Works''); and



 


		5.	all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, “Trade Secrets'');



 


owned,
used, or licensed by the Company as licensee or licensor.


 


(ii)          Agreements.
The SEC Reports contain a complete and accurate list of all material contracts relating to the Company’s Intellectual Property
Rights to which the Company is a party or by which the Company is bound, except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available software programs with a value of less than $10,000 under which the Company
is the licensee. There are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements with respect
to any such agreement.


 


(iii)          Know-How
Necessary for the Business. To the Company’s knowledge: the Company’s Intellectual Property Rights are all those
necessary for the operation of the Company’s businesses as it is currently conducted or as represented, in writing, to the
Purchasers to be conducted. To the Company’s knowledge: the Company is the owner of all right, title, and interest in and
to each of the Intellectual Property Rights, free and clear of all liens, security interests, charges, encumbrances, equities,
and other adverse claims, and has the right to use all of the Intellectual Property Rights, subject in each case to Permitted Liens.
To the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than of the Company.


 




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(iv)      Know-How
Necessary for the Business. To the extent the Company owns any Patents: (A) the SEC Reports contain a complete and accurate
list of all of the Company’s Patents; (B) the Company is the owner of all right, title and interest in and to each of
the Patents, free and clear of all Liens and other adverse claims other than Permitted Liens; (C) all of the issued Patents are
currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs
of working or use), are valid and enforceable, and, except as set forth on Section 3.1(o) of the Disclosure Letter, are
not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing Date; (D) no Patent has
been or is now involved in any interference, reissue, reexamination, or opposition proceeding; and (E) to the Company’s knowledge:
(1) there is no potentially interfering patent or patent application of any third party, and (2) no Patent is infringed or has
been challenged or threatened in any way. To the Company’s knowledge, none of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other
Person.


 


(v)     Trademarks.
To the extent the Company owns any Marks: (A) the SEC Reports contain a complete and accurate list and summary description
of all Marks; (B) the Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of
all Liens and other adverse claims other than Permitted Liens; (C) all Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days after the Closing Date; (D) except as set forth in Section
3.1(o) of the Disclosure Letter, no Mark has been or is now involved in any opposition, invalidation, or cancellation and,
to the Company’s knowledge, no such action is threatened with respect to any of the Marks and (E) to the Company’s
knowledge: (1) there is no potentially interfering trademark or trademark application of any third party, and (2) no Mark is infringed
or has been challenged or threatened in any way. To the Company’s knowledge, none of the Marks used by the Company infringes
or is alleged to infringe any trade name, trademark, or service mark of any third party.


 


(vi)     Copyrights.
To the extent the Company owns any Copyrights: (A) the SEC Reports contain a complete and accurate list of all Copyrights;
(B) the Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all Liens
and other adverse claims other than Permitted Liens; (C) except as set forth on Section 3.1(o) of the Disclosure Letter,
all the Copyrights have been registered and are currently in compliance with formal requirements, are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of the Closing; (D) no
Copyright is infringed or, to the Company’s knowledge, has been challenged or threatened in any way; (E) to the Company’s
knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party; and (F) all works encompassed
by the Copyrights have been marked with the proper copyright notice.


 


(vii) Trade
Secrets. With respect to each Trade Secret of the Company, the documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge
or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value
of its Trade Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Company’s
Trade Secrets subject to Permitted Liens. The Company’s Trade Secrets are not part of the public knowledge or literature,
and, to the Company’s knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other
than the Company) or to the detriment of the Company. Except as set forth on Section 3.1(o) of the Disclosure Letter, no
Trade Secret of the Company is subject to any adverse claim or has been challenged or threatened in any way.


 




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(p)           Insurance. 
The Company and the Subsidiaries are currently insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.
A description of the principal terms of the Company’s directors and officers insurance policy and the name and contact information
for the issuer of such policy are set forth on Section 3.1(p) of the Disclosure Letter. Neither the Company nor any Subsidiary
believes that it will not be able to acquire insurance coverage at reasonable cost as may be necessary to continue its business.


 


(q)           Transactions
With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company
or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $100,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company except as disclosed on Section 3.1(g) of the Disclosure Letter.


 


(r)         Money
Laundering.  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened, nor is there, to the knowledge of the Company or any Subsidiary, any reasonable basis
for any of the foregoing.


 


(s)           Certain
Fees.  Except as set forth on Section 3.1(s) of the Disclosure Letter, no brokerage, finder’s fees, commissions
or due diligence fees are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.
The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by the
Transaction Documents.


 




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(t)           Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, registration
under the Securities Act is not required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.


 


(u)           Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.


 


(v)           Registration
Rights.  Except as set forth on Section 3.1(v) of the Disclosure Letter, and other than each of the Purchasers,
no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company
or any Subsidiary.


 


(w)          Listing
and Maintenance Requirements.  The Common Stock is listed on the Nasdaq Capital Market under the symbol WPCS. Except as
set forth on Section 3.1(w) of the Disclosure Letter or disclosed in the SEC Reports, the Company has not, in the twenty-four
(24) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.


 


(x)         Application
of Takeover Protections.  The Company’s Board of Directors has approved the Transaction Documents under Section
203(a)(1) of the General Corporation Law of the State of Delaware (the “DGCL”) in order to render the restrictions
on “business combinations” (as defined in Section 203 of the DGCL) inapplicable to the execution, delivery or performance
of the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.


 


(y)           Disclosure. 
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information.   The Company
understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities
of the Company.  All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and
its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Letter, taken
as a whole is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
For the avoidance of doubt, information disclosed in one section of the Disclosure Letter shall not be deemed disclosed in any
other section of the Disclosure Letter unless there is an explicit cross reference to such other section. The Company acknowledges
and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.


 




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(z)           No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor, to the knowledge of the Company, any of its Affiliates, nor any Person acting on its or, to the knowledge
of the Company, their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy
any security, under circumstances that would cause this offering of the Securities by the Company to be integrated with prior offerings
by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities
Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company
are listed or designated.


 


(aa)         Solvency. 
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the aggregate Subscription Amount from all the Purchasers: (i) the fair saleable value of the assets of the Company
and its Subsidiaries taken as a whole exceeds the amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including known contingent liabilities) of the Company and its Subsidiaries as they mature, (ii) the assets
of the Company and its Subsidiaries do not constitute unreasonably small capital to carry on its business as now conducted and
as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company and its Subsidiaries consolidated and projected capital requirements and capital availability thereof,
and (iii) the current cash flow of the Company and its Subsidiaries together with the proceeds the Company would receive, were
they to liquidate all of their assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of their liabilities when such amounts are required to be paid.  The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. The SEC Reports set forth all Liens and outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $400,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business; and (z) the present value of any lease payments in excess of $400,000 due under leases required to be capitalized
in accordance with GAAP.  The Company is not in default with respect to any Indebtedness.


 


(bb)        Tax
Status.  Except as disclosed on Section 3.1(bb) of the Disclosure Letter and except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries
each (i) has made or filed all required United States federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and
(iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. Except as disclosed on Section 3.1(bb) of the Disclosure
Letter, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company or of any Subsidiary know of no reasonable basis for any such claim.


 




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(cc)         No
General Solicitation.  Neither the Company nor, to the knowledge of the Company, any person acting on behalf of the Company
has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered
the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule
501 under the Securities Act.


 


(dd)        Foreign
Corrupt Practices.  Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of FCPA.


 


(ee)       Accountants. 
The Company’s accounting firm is set forth on Section 3.1(ee) of the Disclosure Letter of the Disclosure Letter. To
the knowledge and belief of the Company, such accounting firm is registered with the Public Company Accounting Oversight Board,
and shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for
the fiscal year ending April 30, 2017.


 


(ff)        No
Disagreements with Accountants and Lawyers.  Except as set forth on Section 3.1(ff) of the Disclosure Letter,
there are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any
of the Transaction Documents.


 


(gg)        Acknowledgment
Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further
represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


(hh)        Acknowledgment
Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Section 4.20 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked
by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the
Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently have a “short”
position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y)
one or more Purchasers may engage in hedging activities in accordance with all applicable laws at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing
stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.  The
Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.


 




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(ii)         Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement
agent in connection with the placement of the Securities.


 


(jj)        Stock
Option Plans. Except as set forth on Section 3.1(jj) of the Disclosure Letter or set forth in the SEC Reports, as of
the date hereof, no stock options have been granted, nor any commitments made to grant stock options, under the Stock Option Plan,
and neither the Company nor any Subsidiary has ever had an option plan, other than the Stock Option Plan and other stock option
plans which were described in the SEC Reports and are no longer in effect. The Company has not knowingly granted, and there is
no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.


 


(kk)        Office
of Foreign Assets Control.  Neither the Company nor any Subsidiary  nor, to the Company's knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(ll)        Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Section 12(g) of
the Exchange Act. Pursuant to the provisions of the Exchange Act, except as disclosed on Section 3.1(ll) of the Disclosure
Letter, the Company has timely filed all reports and other materials required to be filed by the Company thereunder with the SEC
during the preceding twelve months. As of the Closing Date, the Company is not a “shell company” as those terms are
employed in Rule 144 under the Securities Act.


 




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(mm)        Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.


 


(nn)        No
Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and will furnish to the Purchasers a copy of any disclosures provided thereunder. A form of Rule
506 Bad Actor Disqualification Questionnaire is attached hereto as Exhibit F.


 


3.2          Representations
and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):


 


(a)           Organization;
Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law. If such Purchaser is an entity, the address of its principal place
of business is as set forth on the signature page hereto, and if such Purchaser is an individual, the address of its principal
residence is as set forth on the signature page hereto.


 




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(b)           Understandings
or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.


 


(c)           Purchaser
Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date
on which it exercises any Warrants it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.
Such Purchaser has the authority and is duly and legally qualified to purchase and own the Securities. Such Purchaser is able to
bear the risk of such investment for an indefinite period and to afford a complete loss thereof. Such Purchaser has provided the
information in the Accredited Investor Questionnaire attached hereto as Exhibit E (the “Investor Questionnaire”).
The information set forth on the signature pages hereto and the Investor Questionnaire regarding such Purchaser is true and complete
in all respects. Except as disclosed in the Investor Questionnaire, such Purchaser has had no position, office or other material
relationship within the past three years with the Company or Persons (as defined below) known to such Purchaser to be affiliates
of the Company, and is not a member of the Financial Industry Regulatory Authority or an “associated person” (as such
term is defined under the FINRA Membership and Registration Rules Section 1011).


 


(d)           Experience
of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 




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(e)           Information
on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission to the Company’s
filings made with the Commission during the period from the date that is two years preceding the date hereof through the tenth
business day preceding the Closing Date in which such Purchaser purchases Securities hereunder, including but not limited to the
Risk Factor section of the Company’s Annual Report on Form 10-K filed with the Commission for the fiscal year ended April
30, 2016 (hereinafter referred to collectively as the “SEC Reports”).  Purchasers are not deemed to
have any knowledge of any information not included in the Reports unless such information is delivered in the manner described
in the next sentence.  In addition, such Purchaser may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as such Purchaser has requested, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the “Other Written Information”), and considered all factors
such Purchaser deems material in deciding on the advisability of investing in the Securities.  Such Purchaser was afforded
(i) the opportunity to ask such questions as such Purchaser deemed necessary of, and to receive answers from, representatives of
the Company concerning the merits and risks of acquiring the Securities; (ii) the right of access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable such Purchaser
to evaluate the Securities; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to acquiring the
Securities.


 


(f)           Certain
Transactions and Confidentiality.  Such Purchaser understands and agrees that the Securities have not been registered
under the Securities Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require
registration under the Securities Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered
under the Securities Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands
and agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.


 


(g)           Communication
of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.


 


(h)          No
Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental or
state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


 


(i)           No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that
for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.


 




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(j)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a written term sheet of the Offering from the Company setting forth the material terms of the transactions contemplated
hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed
by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection
with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of
doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification
of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions after
the Closing Date.


 


(k)          Pre-Existing
Relationships. The Purchaser represents and warrants that: (i) the Purchaser has a prior substantial pre-existing relationship
with the Company, the Purchaser is not investing in the Offering in connection with or as a result of any registration statement
on Form S-1, filed with the SEC by the Company   and (ii) no Securities were offered or sold to it by means of any form
of general solicitation or general advertising, and in connection therewith, the Purchaser did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees
were invited by any general solicitation or general advertising; or (C) observe any website or filing of the Company with the SEC
in which any offering of securities by the Company was described and as a result learned of any offering of securities by the Company.


 


(l)          Non-Affiliate
Status. The Purchaser represents and warrants that: (i) it is not an “affiliate” of the Company as such term is
defined in Rule 405 promulgated under the Securities Act or Rule 12b-2 promulgated under the Exchange Act; (ii) during the
last six months the Purchaser has not engaged in any transactions in violation of Section 16 of the Exchange Act; and (iii) the
consummation of the transactions contemplated hereby will not result in any violation of Section 16 of the Exchange Act by the
Purchaser.


 


(m)          Survival.
The foregoing representations and warranties shall survive the Closing Date.


 




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The Company acknowledges and agrees that
the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.


 


ARTICLE
IV.


OTHER
AGREEMENTS OF THE PARTIES


 


4.1         Transfer
Restrictions.


 


(a)          Securities
Laws. The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with
any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate
of a Purchaser or in connection with a pledge as contemplated in Section 4.1(c), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration
of such transferred Securities under the Securities Act.  As a condition of such transfer, any such transferee shall agree
in writing to be bound by the terms of this Agreement, and the Registration Rights Agreement, and shall have the rights and obligations
of a Purchaser under this Agreement and the other Transaction Documents.


 


(b)          Legend.
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the
following form:


 


[NEITHER]
THIS SECURITY [NOR THE SECURITIES [FOR] WHICH THIS SECURITY IS EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  TO THE EXTENT PERMITTED BY APPLICABLE SECURITIES LAWS, THIS SECURITY [AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 




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(c)          Pledge.
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may
transfer pledge or secure Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At such Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer
of the Securities including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of selling stockholders thereunder.


 


(d)          Legend
Removal.Certificates evidencing the Conversion Shares and Warrant Shares shall not contain any legend (including the legend
set forth in Section 4.1(b) hereof): (i) while a registration statement (including the Registration Statement) covering the resale
of such security is effective under the Securities Act, (ii) following any sale of such Conversion Shares and Warrant Shares pursuant
to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the
Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder.
If all or any portion of a Warrant is exercised, or Shares are converted, at a time when there is an effective registration statement
to cover the resale of the Warrant Shares or Conversion Shares, as applicable, or if such Warrant Shares or Conversion Shares,
as applicable, may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Warrant Shares or Conversion
Shares, as applicable, shall be issued free of all legends. The Company agrees that following such time as such legend is no longer
required under this Section 4.1(d), it will, no later than five Trading Days following the delivery by a Purchaser to the Company
or the Transfer Agent of a certificate representing the Conversion Shares or Warrant Shares, as applicable, issued with a restrictive
legend (such fifth Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser
a certificate representing such shares that is free from all restrictive and other legends (however, the Corporation shall use
reasonable best efforts to deliver such shares within three (3) Trading Days). The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. In lieu of delivering
physical certificates representing the unlegended shares, upon request of a Purchaser, so long as the certificates therefor do
not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon, the Company
shall cause its transfer agent to electronically transmit the unlegended shares by crediting the account of Purchaser’s prime
broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.


 


(e)          DWAC.
In lieu of delivering physical certificates representing the unlegended shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the unlegended shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.


 




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(f)          Injunction.
In the event a Purchaser shall request delivery of Conversion Shares or Warrant Shares as described in this Section 4.1 and the
Company is required to deliver such Securities, the Company may not refuse to deliver such Securities based on any claim that such
Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the
Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining
and or enjoining delivery of such unlegended Securities shall have been sought and obtained by the Company.


 


(g)          Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Shares as required pursuant
to this Agreement and after the Legend Removal Date, the Purchaser, or a broker on the Purchaser’s behalf, purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the shares
of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as unlegended Shares, together with interest thereon at a rate of 12% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as unlegended shares, the Company shall be required to
pay the Purchaser $1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the Buy-In.


 


4.2    Furnishing
of Information; Public Information.


 


(a)      Until
the earliest of the time that (i) no Purchaser owns any Securities, (ii) the Warrants have expired, or (iii) five (5) years after
the Closing Date, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange
Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.


 


(b)           At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability
to sell the Securities, an amount in cash equal to 0.5% of the aggregate Subscription Amount and purchase price of Warrant Shares
(based on the exercise price paid for such Warrant Shares) of such Purchaser’s Securities held by such Purchaser on the day
of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no
longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments to which a Purchaser shall
be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.”
Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of 1% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and
such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief.


 




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4.3           Integration. 
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities by the Company in a manner
that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent
transaction.


 


4.4           Securities
Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m. (New York City time) on the first (1st) Trading Day immediately
following the Closing Date, issue a press release disclosing the material terms of the transactions contemplated hereby, and shall
file a Current Report on Form 8-K including the Transaction Documents as exhibits thereto within the time period required by the
Exchange Act. From and after the issuance of such press release and Form 8-K, the Company represents to the Purchasers that it
shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of
its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission
or any regulatory agency or Trading Market unless the name of such Purchaser is already included in the body of the Transaction
Documents, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection
with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted
under this clause (b).


 


4.5           Non-Public
Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser
or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.


 




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4.6           Use
of Proceeds.  The Company will use the net proceeds to the Company from the sale of the Shares and Warrants hereunder
for general corporate purposes and working capital. The Company shall not use such proceeds: (a) for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business
and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding
litigation (except for payments pursuant to settlement agreements entered into prior to the date hereof and disclosed in the SEC
Reports or in the Disclosure Letter), or (d) in violation of the law, including FCPA or OFAC.


 


4.7           Indemnification
of Purchasers.   Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of Securities Laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct
or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party’s counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for all Purchaser Parties. 
The Company will not be liable to any Purchaser Party under this Agreement (iv) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed; or (v) to
the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach
of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law.


 




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4.8          Reservation
of Common Stock. As of the date hereof, the Company has reserved for each Purchaser and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for each Purchaser for
the purpose of enabling the Company to issue the Conversion Shares issuable upon complete conversion of the Shares issued pursuant
to this Agreement and Warrant Shares issuable upon complete exercise of the Warrants (such amount being the “Required
Minimum”). If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date (an “Authorized Share Failure”), then the Board of Directors shall
use commercially reasonable efforts to amend the Company’s certificate of incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later
than the 60th day after such date. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence
of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy
statement and shall use its commercially reasonable efforts to solicit its stockholders' approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. Notwithstanding
the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority
of the shares of its issued and outstanding Common Stock to approve the increase in the number of authorized shares of Common Stock
without soliciting its stockholders, the Company may satisfy this obligation by obtaining such consent and submitting for filing
with the SEC an Information Statement on Schedule 14C. Calculations hereunder as of the date of this Agreement shall assume a Per
Share Purchase Price of not more than $121, and as of the Closing Date, the actual Per Share Purchase Price. Calculations hereunder
with reference to Warrant Shares will be made assuming exercise of the Warrants on a cash basis.


 


4.9        Listing
of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and prior to the Closing, the Company shall apply to list or
quote all of the Conversion Shares and Warrant Shares on such Trading Market and use commercially reasonable efforts to secure
the listing of all of the Conversion Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Conversion
Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Conversion Shares and Warrant Shares
to be listed or quoted on such other Trading Market as promptly as possible. The Company will then use commercially reasonable
efforts to continue the listing or quotation and trading of its Common Stock on a Trading Market until the later of (i) the five
year anniversary of the Closing Date, (ii) the date no Shares or Warrants are outstanding and (iii) the end of the Protection Period,
and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the
Trading Market until such later date.


 


4.10        Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the
Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.


 




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4.11        Equal
Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or
paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless
the same consideration is also offered to all of the Purchasers that are parties to such Transaction Document. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.


 


4.12    Participation
in Future Financing.


 


(a)          From
the date hereof through the twelve (12) month anniversary of the Closing Date, upon any proposed issuance by the Company or any
of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of cash consideration
and Indebtedness, other than (i) a rights offering to all holders of Common Stock, or (ii) an Exempt Issuance, (a “Subsequent
Financing”), each Purchaser that still owns outstanding Securities shall have the right to participate in the Subsequent
Financing up to an amount equal to the product of (x) the percentage of all Shares issued to all Purchasers hereunder that
were acquired by such Purchaser multiplied by (y) 50% multiplied by (z) the amount of the Subsequent Financing (the “Participation
Maximum”), on the same terms, conditions and price provided for in the Subsequent Financing.


 


(b)          At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.


 


(c)          Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that
such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to participate.


 




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(d)          If
by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees who
at the time are Accredited Investors to participate) is, in the aggregate, equal to or less than the aggregate amount of the Participation
Maximum, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth
in the Subsequent Financing Notice.


 


(e)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Shares and
Warrants purchased hereunder by an eligible Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription
Amounts of Securities purchased hereunder by all eligible Purchasers participating under this Section 4.12.


 


(f)          The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within forty-five (45) Trading Days
after the date of the initial Subsequent Financing Notice.


 


(g)          The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder (for avoidance of doubt, the securities purchased in
the Subsequent Financing shall not be considered securities purchased hereunder) or be required to consent to any amendment to
or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.


 


(h)          Notwithstanding
anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such
transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.


 


4.13        Acknowledgment
of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Shares and Warrant Shares pursuant
to the Transaction Documents, are unconditional and absolute, but subject to the terms and conditions of the Transaction Documents,
and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any
claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.


 




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4.14         Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.


 


4.15         DTC
Program. At all times that the Shares or Warrants are outstanding, the Company will employ as the transfer agent for the Common
Stock and Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common
Stock to be transferable pursuant to such program.


 


4.16         Form
D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the sale of the Securities by the Company
under this Agreement as required under Regulation D. The Company shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions
promptly upon request of any Purchaser.


 


4.17         Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.


 


4.18         Exercise
Procedure. The form of Notice of Exercise included in the Warrants sets forth the totality of the procedures required of the
Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to exercise their Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares
in accordance with the terms, conditions and time periods set forth in the Transaction Documents.


 


4.19         Intentionally
Omitted.


 


4.20   Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly disclosed or required to be disclosed, whichever
occurs first, in the Form 8-K described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed or required to be publicly
disclosed, whichever occurs first, by the Company in such Form 8-K, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Transaction Documents and the Disclosure Letter. Notwithstanding
the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are required to be disclosed
in the Form 8-K described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable Securities Laws from and after the time that the transactions contemplated
by this Agreement are first disclosed or required to be disclosed, whichever occurs first, in the Form 8-K described in Section
4.4, and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the filing of such
Form 8-K or after the date such Form 8-K is required to have been filed, whichever occurs first.  Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by
this Agreement.


 




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4.21         Purchaser’s
Exercise Limitations. The Company shall not effect any exercise of the right granted to each Purchaser in Section 4.12 of this
Agreement, and a Purchaser shall not have the right to exercise any portion of such right, pursuant to Section 4.12, to the extent
that after giving effect to the issuance after application of such right, the Purchaser (together with the Purchaser’s Affiliates,
and any other Persons acting as a group together with the Purchaser or any of the Purchaser’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by the Purchaser and its Affiliates shall include the number of shares of Common Stock
issuable upon application of the rights set forth in Section 4.12 with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (i) further application of such rights by the Purchaser
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any Warrants or other Common Stock Equivalents) subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially owned by the Purchaser or any of its Affiliates.  Except
as set forth in the preceding sentence, for purposes of this Section 4.21, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Purchaser
that the Company is not representing to the Purchaser that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Purchaser is solely responsible for any schedules required to be filed in accordance therewith. To the extent that
the limitation contained in this Section 4.21 applies, the determination of whether the rights in Section 4.12 (in relation to
other securities owned by the Purchaser together with any Affiliates) and of which portion of such rights is exercisable shall
be in the sole discretion of the Purchaser, and the submission of an exercise notice or other demand shall be deemed to be the
Purchaser’s determination of which rights are exercisable (in relation to other securities owned by the Purchaser together
with any Affiliates) and of which portion of the rights are exercisable, in each case subject to the Beneficial Ownership Limitation.
To ensure compliance with this restriction, a Purchaser will be deemed to represent to the Company when it delivers an exercise
notice or other demand that such exercise notice or demand has not violated the restrictions set forth in this paragraph, and the
Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 4.21, in determining the number of outstanding shares of Common Stock, a Purchaser
may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent
written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon
the written or oral request of a Purchaser, the Company shall within two Trading Days confirm orally and in writing to the Purchaser
the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including the Warrants, by the Purchaser
or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 9.99. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4.21 to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of the option right. In the event the limitations in this Section 4.21 would prevent the exercise of a Purchaser’s
rights under Section 4.12, then such Purchaser may exercise all such rights and comply with all obligations applicable thereto
except that the delivery of Common Stock will be deferred until such time as such Purchaser provides notice to the Company that
such Purchaser may receive or beneficially own such Common Stock which exceeds the Beneficial Ownership Limitation without exceeding
the Beneficial Ownership Limitation. In the event the Company’s compliance with Section 4.12 would cause the Purchaser to
exceed the Beneficial Ownership Limitation, then the requirement to deliver Additional Shares shall be deferred one or more times
until the Purchaser notifies the Company that such delivery will not cause the Purchaser to exceed the Beneficial Ownership Limitation.


 




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4.22         Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.


 


4.23         Dispute
Resolution under the Certificate of Designation. Capitalized terms used in this Section 4.23 but not otherwise defined shall
have the meanings given to them in the Certificate of Designation.


 


(a)          Submission
to Dispute Resolution.


 


(i)          In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price or a fair market value or the arithmetic
calculation of a Conversion Rate (as the case may be) (including, without limitation, a dispute relating to the determination of
any of the foregoing), the Company or the applicable Purchaser (as the case may be) shall submit the dispute to the other party
via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such
dispute or (B) if by such Purchaser at any time after such Purchaser learned of the circumstances giving rise to such dispute.
If such Purchaser and the Company are unable to promptly resolve such dispute relating to such Bid Price, such Closing Bid Price,
such Closing Sale Price, such Conversion Price, such fair market value, or the arithmetic calculation of such Conversion Rate (as
the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or such Purchaser
(as the case may be) of such dispute to the Company or such Purchaser (as the case may be), then such Purchaser may, at its sole
option, select an independent, reputable investment bank to resolve such dispute.


 


(ii)         Such
Purchaser and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 4.23 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date
on which such Purchaser selected such investment bank (the “Dispute Submission Deadline”) (the documents referred
to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”)
(it being understood and agreed that if either such Purchaser or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer
be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment
bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation
that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Company and such Purchaser or otherwise requested by such investment bank, neither the Company nor such Purchaser shall
be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute
(other than the Required Dispute Documentation) .




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(iii)        The
Company and such Purchaser shall cause such investment bank to determine the resolution of such dispute and notify the Company
and such Purchaser of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.


 


(b)          Miscellaneous.
The Company expressly acknowledges and agrees that the terms of the Certificate of Designations and each other applicable Transaction
Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment
bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment
bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving
such dispute such investment bank shall apply such findings, determinations and the like to the terms of the Certificate of Designations
and any other applicable Transaction Documents, (iii) such Purchaser (and only such Purchaser), in its sole discretion, shall have
the right to submit any dispute described in this Section 4.23 to any state or federal court sitting in New York, New York in lieu
of utilizing the procedures set forth in this Section 4.23 and (iv) nothing in this Section 4.23 shall limit such Purchaser from
obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described
in this Section 4.23) .


 


ARTICLE V.


MISCELLANEOUS


 


5.1         Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice given at any time to the Company,
if the Closing has not been consummated on or before December 27, 2016; provided, however, that such termination will not
affect the right of any party to sue for any breach by any other party (or parties). In the event of any termination by a Purchaser
under this Section 5.1, the Company shall promptly (and in any event within two (2) Business Days of such termination) refund all
of such Purchaser’s subscription amount.


 


5.2         Fees
and Expenses.  Except as expressly set forth in the Transaction Documents, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.  Except as set forth in the Warrants, the
Company shall pay all Transfer Agent fees, stamp taxes and other similar taxes and duties levied in connection with the delivery
of any Securities to the Purchasers. At the Closing the Company agrees to pay additional legal fees of G&M in the amount of
$7,500, counsel to some of the Purchasers, incurred in connection with the negotiation, execution and delivery of the Transaction
Documents.


 


5.3         Entire
Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, and including the Disclosure
Letter, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.


 




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5.4         Notices. 
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: WPCS International Incorporated, 521 Railroad Avenue, Suisun City, CA
94585, Attn: Sebastian Giordano, Chief Executive Officer, facsimile: (707) 421-1359, with a copy by fax only to (which shall not
constitute notice): K&L Gates LLP, 599 Lexington Avenue, New York, NY 10022, Attn: Robert S. Matlin, Esq., facsimile: (212)
536-3901, and (ii) if to the Purchasers, to: the addresses and fax numbers indicated on the signature pages hereto, with an additional
copy by fax only to (which shall not constitute notice): Grushko & Mittman, P.C., 515
Rockaway Avenue, Valley Stream, New York 11581, Attn: Barbara R. Mittman, Esq., facsimile: (212) 697-3575.


 


5.5           Amendments;
Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchasers holding at least a majority of the component of the affected
Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right. As employed herein, “consent” shall mean consent of the holders of the majority of the then outstanding effected
component of the Securities on the date such consent is requested or required.


 


5.6           Headings. 
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


5.7           Successors
and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.” 


 


5.8           No
Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.7.


 




    37


     


    

 


5.9           Governing
Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If
either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then in addition to
the obligations of the Company under Section 4.7, the prevailing party in such action, suit or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 


5.10         Survival. 
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities at the Closings
for the applicable statute of limitations.


 


5.11         Execution. 
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.12         Severability. 
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.13         Rescission
and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission
of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such
rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for
such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such restored right).


 




    38


     


    

 


5.14         Replacement
of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and upon surrender and cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft, destruction, or mutilation, and of the ownership of such Security. 
The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including
customary indemnity and bonds) associated with the issuance of such replacement Securities.


 


5.15         Remedies. 
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree
that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in
the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16         Payment
Set Aside.  To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


5.17         Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereof or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience
only, each Purchaser and its respective counsel have chosen to communicate with the Company through G&M.  G&M does
not represent all of the Purchasers.  The Company has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. 
It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is
between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among
the Purchasers. No Purchaser shall act in concert, as a group, or together with any other Purchaser with regard to any vote of
the stockholders of the Company.


 




    39


     


    

 


5.18         Liquidated
Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts due thereunder have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.


 


5.19         Saturdays,
Sundays, Holidays, etc.     If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.


 


5.20         Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.


 


5.21         Usury.    To
the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing Date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.


 


5.22         WAIVER
OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.


 


5.23         Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably
adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described in this Agreement
and Warrants. 


 


(Signature Pages Follow)


 




    40


     


    

 


IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.






	WPCS INTERNATIONAL INCORPORATED	 	Address for Notice:
	 	 	 
	 	 	521 Railroad Avenue
	 	 	Suisun City, CA 94585
	 	 	Fax: (707) 421-1359
	 	 	 	 
	By: 	/s/ David Allen	 	 
	Name:	David Allen	 	 
	Title: 	Chief Financial Officer	 	 
	 	 	 
	With a copy to (which shall not constitute notice):	 	 
	 	 	 
	K&L Gates LLP	 	 
	599 Lexington Avenue	 	 
	New York, NY 10022	 	 
	Attn: Robert S. Matlin, Esq.	 	 
	Fax: (212) 536-3901	 	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




    41


     


    

  


[PURCHASER SIGNATURE PAGES TO WPCS INTERNATIONAL
INCORPORATED


SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.


 


Name of Purchaser: Alpha Capital Anstalt


 


Signature of Authorized Signatory of Purchaser: /s/ Konrad
Ackermann


 


Name of Authorized Signatory: Konrad Ackermann


 


Title of Authorized Signatory: Director


 


Address for Delivery of Securities to Purchaser
(if not same as address for notice):


 


Alpha Capital Anstalt


c/o LH Financial Services Corp.


510 Madison Avenue Suite 1400


New York, NY 10022


 


Subscription Amount: US $288,737.50


 


Preferred Stock: 2,066


 


Warrants: 309,900


 


EIN Number, if applicable, will be provided
under separate cover:


 




    42


     


    

 


[PURCHASER SIGNATURE PAGES TO WPCS INTERNATIONAL
INCORPORATED


SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.


 


Name of Purchaser: Brio Capital Master Fund Ltd.


 


Signature of Authorized Signatory of Purchaser: /s/ Shaye
Hirsch


 


Name of Authorized Signatory: Shaye Hirsch


 


Title of Authorized Signatory: Director


 


Address for Delivery of Securities to Purchaser
(if not same as address for notice):


 


c/o Brio Capital Management LLC


 


100 Merrick Road, Suite 401W


 


Rockville Center, NY 11570-4800


 


Subscription Amount: US$173,231.25


 


Preferred Stock: 1,239


 


Warrants: 185,850


 


EIN Number, if applicable, will be provided
under separate cover:


 




    43


     


    

 


EXHIBITS


 


	Exhibit A	Form of Warrant
	Exhibit B	Certificate of Designation
	Exhibit C	Registration Rights Agreement
	Exhibit D	Intentionally Omitted
	Exhibit E	Form of Investor Questionnaire
	Exhibit F	Form of Rule 506 Bad Actor Disqualification Questionnaire


 




    44


     


    

 


EXHIBIT E


 


ACCREDITED INVESTOR QUESTIONNAIRE


IN CONNECTION WITH INVESTMENT IN SERIES
H-2 PREFERRED STOCK AND


WARRANTS OF WPCS INTERNATIONAL INCORPORATED,


A DELAWARE CORPORATION


PURSUANT TO SECURITIES PURCHASE AGREEMENT
DATED DECEMBER 21, 2016


 


	To :	WPCS International Incorporated
	 	521 Railroad Avenue
	 	Suisun City, CA 94585


 


	 	Palladium Capital Advisors LLC
	 	10 Rockefeller Plaza, Suite 909
	 	New York, NY 10020


 


INSTRUCTIONS


 


PLEASE ANSWER ALL QUESTIONS.
If the appropriate answer is “None” or “Not Applicable”, so state. Please print or type your answers to
all questions. Attach additional sheets if necessary to complete your answers to any item.


 


Your answers will be
kept strictly confidential at all times. However, Palladium Capital Advisors, LLC and WPCS International Incorporated (collectively,
the “Company”) may present this Questionnaire to such parties as it deems appropriate in order to assure itself that
the offer and sale of securities of the Company will not result in a violation of the registration provisions of the Securities
Act of 1933, as amended, or a violation of the securities laws of any state.


 


1.          Please
provide the following information:


 


	Name:	 	 
	 
	Name of additional purchaser:	 
	(Please complete information in Question 5)	 
	 	 
	Date of birth, or if other than an individual, year of organization or incorporation:
	 
	 
	 
	 


 


2.          Residence
address, or if other than an individual, principal office address:


 


	 
	 
	 
	 
	 
	 
	Telephone number:	 


 




    45


     


    

 





	Social Security Number:	 
	 	 
	Taxpayer Identification Number:	 
	 	 
	3.  Business address:	 


 


	 
	 
	 


 


	Business telephone number:	 




 





	4.  Send mail to:	Residence 	 	 	Business 	 	 


 


5.          With
respect to tenants in common, joint tenants and tenants by the entirety, complete only if information differs from that above:


 


	Residence address:	 
	 
	 
	 
	 
	 
	Telephone number:	 
	 	 
	Social Security Number:	 
	 	 
	Taxpayer Identification Number:	 
	 	 
	Business address:	 
	 
	 
	 
	 
	 
	Business telephone number:	 


 


	Send Mail to:	Residence 	 	 	Business 	 	 


 


6.          Please
describe your present or most recent business or occupation and indicate such information as the nature of your employment, how
long you have been employed there, the principal business of your employer, the principal activities under your management or supervision
and the scope (e.g. dollar volume, industry rank, etc.) of such activities:


 


	 
	 
	 
	 
	 


 




    46


     


    

 


7.          Please
state whether you (i) are associated with or affiliated with a member of the Financial Industry Regulatory Association, Inc. (“FINRA”),
(ii) are an owner of stock or other securities of FINRA member (other than stock or other securities purchased on the open market),
or (iii) have made a subordinated loan to any FINRA member:


 


	 	 	 	 	 
	 	Yes	No


 


If you answered yes to any of (i) –
(iii) above, please indicate the applicable answer and briefly describe the facts below:


 


	 
	 
	 
	 
	 


 


8A.           Applicable
to Individuals ONLY. Please answer the following questions concerning your financial condition as an “accredited investor”
(within the meaning of Rule 501 of Regulation D). If the purchaser is more than one individual, each individual must initial an
answer where the question indicates a “yes” or “no” response and must answer any other question fully,
indicating to which individual such answer applies. If the purchaser is purchasing jointly with his or her spouse, one answer may
be indicated for the couple as a whole:


 


8.1           Does
your net worth* (or joint net worth with your spouse) exceed $1,000,000?


 


	 	 	 	 	 
	 	Yes	No


 


8.2           Did
you have an individual income** in excess of $200,000 or joint income together with your spouse in excess of $300,000 in each of
the two most recent years and do you reasonably expect to reach the same income level in the current year?


 


	 	 	 	 	 
	 	Yes	No


 


8.3           Are
you an executive officer of the Company?


 


	 	 	 	 	 
	 	Yes	No


 


* For purposes hereof, net worth shall
be deemed to include ALL of your assets, liquid or illiquid MINUS any liabilities.


 


** For purposes hereof, the term “income”
is not limited to “adjusted gross income” as that term is defined for federal income tax purposes, but rather includes
certain items of income which are deducted in computing “adjusted gross income”. For investors who are salaried employees,
the gross salary of such investor, minus any significant expenses personally incurred by such investor in connection with earning
the salary, plus any income from any other source including unearned income, is a fair measure of “income” for purposes
hereof. For investors who are self-employed, “income” is generally construed to mean total revenues received during
the calendar year minus significant expenses incurred in connection with earning such revenues.


 


8.B           Applicable
to Corporations, Partnerships, Trusts, Limited Liability Companies and other Entities ONLY:


 




    47


     


    

 


The purchaser is an accredited investor
because the purchaser falls within at least one of the following categories (Check all appropriate lines):


 


		___	(i) a bank as defined in Section 3(a)(2) of the Act or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;



 


		___	(ii) a broker-dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934,
as amended;



 


		___	(iii) an insurance company as defined in Section 2(13) of the Act;



 


		___	(iv) an investment company registered under the Investment Company Act of 1940, as amended (the
“Investment Act”) or a business development company as defined in Section 2(a)(48) of the Investment Act;



 


		___	(v) a Small Business Investment Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;



 


		___	(vi) a plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its employees, where such plan has total assets in
excess of $5,000,000;



 


		___	(vii) an employee benefit plan within the meaning of Title 1 of the Employee Retirement Income
Security Act of 1974, as amended (the “Employee Act”), where the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of the Employee Act, which is either a bank, savings and loan association, insurance company, or registered
investment adviser, or an employee benefit plan that has total assets in excess of $5,000,000, or a self-directed plan the investment
decisions of which are made solely by persons that are accredited investors;



 


		___	(viii) a private business development company, as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940, as amended;



 


		___	(ix) an organization described in Section 501(c)(3) of the Internal Revenue Code, a
                                                                               corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring
                                                                               the securities offered, with total assets in excess of $5,000,000;



 


		___	(x) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a “sophisticated” person, as described in Rule 506(b)(2)(ii)
promulgated under the Act, who has such knowledge and experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment;



 


		___	(xi) an entity in which all of the equity investors are persons or entities described above (“accredited
investors”). ALL EQUITY OWNERS MUST COMPLETE “EXHIBIT A” ATTACHED HERETO.



 




    48


     


    

 


9.A         Do
you have sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and
risks associated with investing in the Company?


 


	 	 	 	 	 
	 	Yes	No


 


ANSWER QUESTION 9B ONLY IF THE ANSWER TO QUESTION 9A WAS “NO.”


 


9.BIf the answer to Question 9A was
“NO,” do you have a financial or investment adviser (a) that is acting in the capacity as a purchaser representative
and (b) who has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits
and risks associated with investing in the Company?


 


	 	 	 	 	 
	 	Yes	No


 


If you have a financial or investment adviser(s),
please identify each such person and indicate his or her business address and telephone number in the space below. (Each such person
must complete, and you must review and acknowledge, a separate Purchaser Representative Questionnaire which will be supplied at
your request).


 


	 
	 
	 


 


10.         You
have the right, will be afforded an opportunity, and are encouraged to investigate the Company and review relevant factors and
documents pertaining to the officers of the Company, and the Company and its business and to ask questions of a qualified representative
of the Company regarding this investment and the properties, operations, and methods of doing business of the Company.


 


Have you or has your purchaser representative,
if any, conducted any such investigation, sought such documents or asked questions of a qualified representative of the Company
regarding this investment and the properties, operations, and methods of doing business of the Company?


 


	 	 	 	 	 
	 	Yes	No


 


	If so, briefly describe:	 
	 
	 


 


If so, have you completed your investigation
and/or received satisfactory answers to your questions?


 


	 	 	 	 	 
	 	Yes	No


 


11.         Do
you understand the nature of an investment in the Company and the risks associated with such an investment?


 


	 	 	 	 	 
	 	Yes	No


 




    49


     


    

 


12.         Do
you understand that there is no guarantee of any financial return on this investment and that you will be exposed to the risk of
losing your entire investment?


 


	 	 	 	 	 
	 	Yes	No


 


13.         Do
you understand that this investment is not liquid?


 


	 	 	 	 	 
	 	Yes	No


 


14.         Do
you have adequate means of providing for your current needs and personal contingencies in view of the fact that this is not a liquid
investment?


 


	 	 	 	 	 
	 	Yes	No


15.         Are
you aware of the Company’s business affairs and financial condition, and have you acquired all such information about the
Company as you deem necessary and appropriate to enable you to reach an informed and knowledgeable decision to acquire the Interests?


 


	 	 	 	 	 
	 	Yes	No


 


16.         Do
you have a “pre-existing relationship” with the Company or any of the officers of the Company?


 


	 	 	 	 	 
	 	Yes	No


 


(For purposes hereof, “pre-existing
relationship” means any relationship consisting of personal or business contacts of a nature and duration such as would enable
a reasonably prudent investor to be aware of the character, business acumen, and general business and financial circumstances of
the person with whom such relationship exists.)


 


If so, please name the individual or other
person with whom you have a pre-existing relationship and describe the relationship:


 


	 
	 
	 


 




    50


     


    

 


17.         Exceptions
to the representations and warranties made in Section 3.2 of the Securities Purchase Agreement (if no exceptions, write “none”
– if left blank, the response will be deemed to be “none”): ___________________________________________________


 


	 
	 


Dated: _______________, 2016


 


If purchaser is one or more individuals (all individuals must
sign):


 


	 
	(Type or print name of prospective purchaser)
	 
	 
	Signature of prospective purchaser
	 
	 
	Social Security Number
	 
	 
	(Type or print name of additional purchaser)
	 
	 
	Signature of spouse, joint tenant, tenant in common or other signature, if required
	 
	 
	Social Security Number


 




    51


     


    

Annex A


 


Definition of Accredited Investor


 


The securities will
only be sold to investors who represent in writing in the Securities Purchase Agreement that they are accredited investors, as
defined in Regulation D, Rule 501 under the Act which definition is set forth below:


 


1.          A
natural person whose net worth, or joint net worth with spouse, at the time of purchase exceeds $1 million (excluding home); or


 


2.          A
natural person whose individual gross income exceeded $200,000 or whose joint income with that person’s spouse exceeded $300,000
in each of the last two years, and who reasonably expects to exceed such income level in the current year; or


 


3.          A
trust with total assets in excess of $5 million, not formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person described in Regulation D; or


 


4.          A
director or executive officer of the Company; or


 


5.          The
investor is an entity, all of the owners of which are accredited investors; or


 


6.          (a)
bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A)
of the Act, (b) any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (c) an insurance
Company as defined in Section 2(13) of the Act, (d) an investment Company registered under the Investment Company Act of 1940 or
a business development Company as defined in Section 2(a)(48) of such Act, (e) a Small Business Investment Company licensed by
the United States Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, (f) an
employee benefit plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, if such plan has total assets in excess of $5 million, (g) an employee benefit plan within
the meaning of Title I of the Employee Retirement Income Securities Act of 1974, and the employee benefit plan has assets in excess
of $5 million, or the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, that is either
a bank, savings and loan institution, insurance Company, or registered investment advisor, or, if a self-directed plan, with an
investment decisions made solely by persons that are accredited investors, (h) a private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of the Internal
Revenue code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with assets in excess of $5 million.


 




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EXHIBIT “A” TO ACCREDITED INVESTOR
QUESTIONNAIRE


 


ACCREDITED CORPORATIONS, PARTNERSHIPS,
LIMITED LIABILITY COMPANIES, TRUSTS OR OTHER ENTITIES INITIALING QUESTION 8B(xi) MUST PROVIDE THE FOLLOWING INFORMATION.


 


I hereby certify that set forth below is
a complete list of all equity owners in __________________ [NAME OF ENTITY], a                                               
[TYPE OF ENTITY] formed pursuant to the laws of the State of                                    
. I also certify that EACH SUCH OWNER HAS INITIALED THE SPACE OPPOSITE HIS OR HER NAME and that each such owner understands
that by initialing that space he or she is representing that he or she is an accredited individual investor satisfying the test
for accredited individual investors indicated under “Type of Accredited Investor.”


 





	   	 	 
	 	signature of authorized corporate officer, general partner
or trustee









 


	 	Name of Equity Owner	 	Type of Accredited Investor 1 


 


	1.	 
	 	 
	2.	 
	 	 
	3.	 
	 	 
	4.	 
	 	 
	5.	 
	 	 
	6.	 
	 	 
	7.	 
	 	 
	8.	 
	 	 
	9.	 
	 	 
	10.	 


 


 


 






1 Indicate
which Subparagraph of 8.1 - 8.3 the equity owner satisfies.


 




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EXHIBIT F


 


RULE 506 BAD ACTOR DISQUALIFICATION QUESTIONNAIRE


 


	 	 	______________ ___, 2016
	Name	 	 


 


WPCS International
Incorporated (the “Company”) is about to close a private placement of securities pursuant to the terms of a Securities
Purchase Agreement. Under an SEC Rule effective September 23, 2013, the Company is requesting each director and executive officer
to complete and execute this questionnaire. Please answer yes or no to all questions listed below.


 


	
        DEFINITION OF PROMOTERS

         

        Under the Securities Act of 1933 (the “Act”) Rule
        405 defines a promoter as any person—individual or legal entity—that either alone or with others, directly or indirectly
        takes initiative in founding the business or enterprise of the issuer, or, in connection with such founding or organization, directly
        or indirectly receives 10% or more of any class of issuer securities or 10% or more of the proceeds from the sale of any class
        of issuer securities (other than securities received solely as underwriting commissions or solely in exchange for property). 
        The test considers activities “alone or together with others, directly or indirectly”; therefore, the result does not
        change if there are other legal entities (which may themselves be promoters) in the chain between that person and the issuer.
        

         

        DEFINITION OF INVESTMENT MANAGERS AND PRINCIPALS OF POOLED
        INVESTMENT FUND ISSUERS

         

        For issuers that are pooled investment funds, the rule covers
        investment advisers and other investment managers of the fund; the directors, general partners, managing members, executive officers
        and other officers participating in the offering of such investment managers; and the directors, executive officers and other officers
        participating in the offering of the investment managers’ general partners or managing members.

         

        DEFINITION OF COMPENSATED SOLICITORS

         

        Persons compensated for soliciting investors
        as well as their directors, general partners, managing members, executive officers and officers participating in the offering. 
        This category covers any persons compensated for soliciting investors but will typically involve broker-dealers and other intermediaries.

         

        DEFINITION OF DIRECTORS, GENERAL PARTNERS AND MANAGING MEMBERS
        OF THE ISSUER

         

        Members of the Board of Directors (for
        issuers that are corporations), general partners (for issuers that are partnerships) and managing members (for issuers that are
        limited liability companies). 

         

        DEFINITION OF EXECUTIVE OFFICERS AND
        PARTICIPATING OFFICERS OF THE ISSUER

         

        The term “executive officer”
        means a company’s president, any vice president in charge of a principal business unit, division or function (such as sales,
        administration or finance), any other officer who performs a policy-making function or any other person who performs similar policy-making
        functions. The term “officer” means a president, vice president, secretary, treasurer or principal financial officer,
        comptroller or principal accounting officer, as well as any person who routinely performs corresponding functions.  Participation
        in an offering would have to be more than transitory or incidental involvement, and could include activities such as participation
        or involvement in due diligence activities, involvement in the preparation of disclosure documents, and communication with the
        issuer, prospective investors or other offering participants.

         

        DEFINITION OF 20% BENEFICIAL OWNERS OF THE ISSUER

         

        Beneficial owners of 20% or more of the
        issuer’s outstanding equity securities, calculated on the basis of total voting power rather than on the basis of ownership
        of any single class of securities.

         

        NOTE ON REFERENCES TO THE COMPANY

         

        All references to the Company made herein
        include its predecessors and affiliated issuers.



 




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1.          Criminal
Convictions: Within the past 10 years (or five years, in the of case the Company), have you or the Company been convicted of
any felony or misdemeanor


 


(a)          In
connection with the purchase or sale of a security


 


	 	YES	 	 	NO	 	 


 


(b)          Involving
the making of a false filing with the Securities and Exchange Commission (the “SEC”)


 


	 	YES	 	 	NO	 	 


 


(c)          Arising
out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor
of purchasers of securities.


 


	 	YES	 	 	NO	 	 


 


2.          Court
injunctions and restraining orders: Within the past five years, have you or the Company been the subject of a court
injunction or restraining order


 


(a)          In
connection with the purchase or sale of a security


 


	 	YES	 	 	NO	 	 


 


(b)          Involving
the making of a false filing with the SEC


 


	 	YES	 	 	NO	 	 


 


(c)          Arising
out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor
of purchasers of securities.


 


	 	YES	 	 	NO	 	 


 


3.          Final
orders of certain state and federal regulators: Have you or the Company been the subject of any final orders of state regulators
of securities, insurance, banking, savings associations or credit unions; federal banking agencies; the Commodity Futures Trading
Commission and the National Credit Union Administration that


 


(a)           Bar
you or the Company from associating with a regulated entity, engaging in the business of securities, insurance or banking, or engaging
in savings association or credit union activities or


 


	 	YES	 	 	NO	 	 


 




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(b)           Are
based on a violation of a law or regulation that prohibits fraudulent, manipulative, or deceptive conduct and were issued within
the last 10 years


 


	 	YES	 	 	NO	 	 


 


4.          SEC
disciplinary orders: Are you or the Company currently the subject of any SEC disciplinary orders relating to brokers, dealers,
municipal securities dealers, investment companies, and investment advisers and their associated persons under Section 15(b) or
15B(c) of the Securities Exchange Act of 1934, or Section 203(e) or (f) of the Investment Advisers Act that


 


			



(a) Suspends or revokes
your or the Company’s registration as a broker, dealer, municipal securities dealer or investment adviser


 


			



	 	YES	 	 	NO	 	 


 


(1) Places limitations
on your or the Company’s activities, functions or operations


 


	 	YES	 	 	NO	 	 


 


(2) Bars you or the
Company from being associated with any entity or from participating in the offering of any penny stock


 


			



	 	YES	 	 	NO	 	 


 


5.          SEC
cease-and-desist orders: Within the last five years, have you or the Company been the subject of SEC orders to cease and desist
from committing or causing a violation or future violations of 


 


(a) The scienter-based
anti-fraud provisions of the federal securities laws


 


	 	YES	 	 	NO	 	 


 


(b) Section 5 of the
Act


 


	 	YES	 	 	NO	 	 


 


6.          Suspension
or expulsion from membership in an SRO or from association with an SRO member:  Have you or the Company been suspended or expelled
from membership in, or suspended or barred from association with a member of, a securities self-regulatory organization or “SRO”
(i.e., a registered national securities exchange or national securities association, such as FINRA) for any act or omission
to act constituting conduct inconsistent with just and equitable principles of trade.


 


	 	YES	 	 	NO	 	 


 


7.          SEC
stop orders: 


 


(a) Within the last five
years, have you, as an officer or director of an issuer, or the Company filed a registration statement or Regulation A offering
statement that was the subject of a SEC refusal order, stop order or order suspending the Regulation A exemption, or are you now
the subject of an investigation or proceeding to determine whether such an order should be issued.


 


	 	YES	 	 	NO	 	 


 




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(b) Within the last five
years, have you or the Company been, or been named as, an underwriter of securities under a registration statement or Regulation
A offering statement that was the subject of a Commission refusal order, stop order or order suspending the Regulation A exemption,
or are you now the subject of an investigation or proceeding to determine whether such an order should be issued.


 


	 	YES	 	 	NO	 	 


 


8.          U.S.
Postal Service false representation orders: Within the last five years have you or the Company been subject to a U. S Postal
Service false representation order, temporary restraining order or preliminary injunction with respect to conduct alleged by the
U.S. Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.


 


	 	YES	 	 	NO	 	 


 


The foregoing answers
are true and correct in all respects. I understand that a “yes” answer will disqualify the issuer from relying on exemption
under Rule 506 under the Securities Act of 1933.


 


	Dated:	 	, 201__ 	 
	 	 	Signature


 




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